Hospitality industry loses $1 billion
A HOSPITALITY sector executive says the industry lost $1 billion in potential revenue this year, after multiple business closures precipitated by the outbreak of the Covid-19 pandemic.
The disease was discovered in China at the end of last year, before spreading across the world, forcing tourists to abort travel plans after airlines grounded operations.
Hospitality Association of Zimbabwe president Clive Chinwada said the sector was facing the greatest threat in its history after operators ran into financial dire straits due to a slowdown in arrivals.
The Tourism Business Council of Zimbabwe has estimated that the industry will decline by up to 97% this year as a result of losses stemming out of the pandemic.
It says recovery of the industry will hinge on how the domestic tourism sector will respond in the aftermath of the pandemic.
“(We have lost) in excess of $1 billion when you aggregate the contribution of our industry to national gross domestic product,” Chinwada told Standard
business in an exclusive interview.
“If you talk to the major poultry farmers, you will understand they have struggled for demand in the past five months because fastfood outlets, restaurants and hotels have not come to the party.
“It goes beyond the industry alone.”
Chinwada said he was not expecting much from international travel in the short term.
Asked if the sector was ready to combat the spread of Covid-19 after the government gave them the greenlight to resume operations, Chinwada said the industry would operate under strict guidelines released by the World Health Organisation (WHO) early this year.
“The industry has been at the forefront in fighting Covid-19, including making donations to the state for this cause,” he said.
“As operators, we have measures at property level in line with WHO guidelines.
“These include disinfection of rooms, physical distancing measures in all facilities, provision of ample sanitisation stations in our public spaces and enforcement of mandatory wearing of masks.
“Due to the nature of hospitality operations, we manage events and movement of guests, hence we are able to better manage and prevent transmission.”
Government has promised to inject bailouts of up to $500 million in hotels, restaurants, tour operators and other players to help the sector return to full operations.
However, it has failed to honour its commitment, and many players say they have been pushed to the brink.
THE travel and tourism industry is reopening following almost a year of closure as Zimbabwe implemented measures to prevent the spread of Covid-19. The return has been greeted with high expectations across the sector.
But as Hospitality Association of Zimbabwe, (HAZ) president Clive Chinwada (CC) told our reporter Fidelity Mhlanga (FM) in an interview, it will not be a stroll in the park for the sector.
Below are excerpts from the interview. FM: Tell us about HAZ.
CC: The Hospitality Association of Zimbabwe has evolved for over 75 years to where it is today. It is the main platform on which hospitality sector players meet to share ideas, lobby for policies that promote their interests, network and interact with like-minded bodies in the region.
FM: How has been your journey as HAZ president so far?
CC: I was elected into office at our congress in November of last year. My tenure has come at a time when Covid-19 is presenting the global economy and our industry with its biggest threat and challenge. This crisis remains protracted, causing so much uncertainty.
The bulk of our efforts have been to lobby government to implement policies that help us survive the pandemic.
The hospitality industry was the first sector to engage government to put in place travel policies that would protect the sector and nation from the scourge.
We have also collaborated with other sectors in the tourism value chain to ensure the competitiveness of the entire industry.
FM: What do you want addressed in the 2021 budget?
CC: Our sector has been the worst affected by the pandemic.
It is also a fact that our government may not have the capacity to offer financial stimulus as is happening in some economies in the region such as Botswana or abroad. However, businesses face an existential threat and jobs are being lost in our sector. It is important that government does not pay lip service to helping our industry.
This means coming up with policies such as tax holidays for operators that have reopened to try and save jobs and businesses.
These tax holidays will assist in saving working capital to continue operations.
I am suggesting that for six months or so, our sector be spared from paying taxes, especially value added tax (VAT) in full in order to preserve working capital. The industry is struggling.
FM: The airlines were also in trou
ble.
CC: We must ensure that we open our skies. You would appreciate that Robert Gabriel Mugabe (RGM) International Airport was once a strong regional hub before South Africa became independent.
We do occupy, as a nation, a viable geographical space that can make RGM competitive as the regional hub for air transport.
When you look at the models adopted by Dubai, Ethiopia and Rwanda, this brings enormous benefits.
However, our tariff structures for planes to land, fuel costs, together with uncertainty in our economic policies have robbed us of that opportunity.
Hospitality is very much dependent on travel and if Zimbabwe could put in place policies that make our major airports regional hubs, that will help transform our sector and the economy.
FM: Tax on foreign tourists has been problematic for years. Is there light at the end of the tunnel?
CC: We have tried as an association to get a waiver on this tax for several years without much success.
Zimbabwe already has a massive taxation and licensing burden on the hospitality sector.
There are about 22 taxation and licensing obligations the sector has to contend with.
It increases the cost of doing business, which costs are then passed onto clients.
As a result, when compared to other destinations, our products become more expensive.
We still pray for a review of VAT on foreign tourists to help make Destination Zimbabwe competitively priced.
FM: The sector has reopened for international travellers. What are you seeing?
CC: The opening-up of our airports for international travellers is a welcome development.
However, whilst we are beginning to receive very few travellers, it will take some time before we ultimately begin having tourists arrive in the huge numbers that we are accustomed to.
We are receiving non-discretionary business travellers for now, those who do not have any other option but to travel.
Whilst a lot of countries have opened their borders, there are still restrictions such as quarantines upon return in most source markets that make it impossible to travel.
For instance, the UK has a 14-day quarantine condition if you are coming from countries outside of a specified bubble.
This makes it impossible to travel. In addition, Covid-19 cases have been rising again in most of our source markets, especially Europe.
It will take time for travel to return to normal.
FM: To what extent has Covid-19-induced lockdowns affected the sector?
CC: This has affected us in a massive way.
The industry has virtually been closed and not trading for over five months for most players.
Where trade has been taking place, it has been at suboptimal levels with occupancies at an all-time low.
Travel restrictions and lockdowns have therefore had massive financial implications for our sector.
We have seen thousands of jobs being lost.
FM: How much revenue was lost? CC: In excess of $1 billion when you aggregate the contribution of our industry to national GDP.
If you talk to the major poultry farmers, you will understand they have struggled for demand in the past five months because fastfood outlets, restaurants and hotels have not come to the party.
It goes beyond the (tourism) industry. FM: What kind of packages have hospitality players put in place to recover?
CC: There are lots of promotions currently on offer from various players. As an industry, we are working on something, but I am not at liberty to talk about it now.
FM: As we go into the last quarter, do you envision improved business?
CC: We are not expecting much from international travel in the short term, hence international destinations like Victoria Falls will need the nation’s concerted effort to save them.
We, however, believe that over the festive season, we will see improved local demand, albeit still constrained by the genuine fears the travelling public has of Covid-19.